Commissioner of Income Tax vs Akash Institute (P) Ltd.

Relying upon the assessment of the assessed''s property by Municipal Corporation of Delhi for purposes of payment of property tax, the AO determined the cost of construction incurred by the assessed at Rs.19,80,200 instead of Rs. 9.80 lakhs disclosed by him in his return. Aggrieved by the said addition the assesses preferred an appeal before the CIT(A) who reversed the view taken by the AO holding that assessment by the Municipal Corporation of Delhi for purposes of payment of property tax was not directly relevant to the question of determining the extent of investment made by the assessed in the construction. The CIT(A) was of the opinion that the report and the assessment made by the MCD for purposes of payment of property tax must be confined to the purpose for which the same was prepared or made. It also noted that the assessment by the MCD for purposes of property tax was based entirely on the estimate of value of the property made by the Inspector of the MCD in one sentence without giving any details or particulars of the basis of his valuation. Aggrieved by the order of the CIT(A), the Revenue appealed to the Tribunal who has by the order impugned in this appeal dismissed the same and upheld the deletion of the addition made by the AO. The Tribunal has in this regard held as under:

We have heard the rival submissions and do not find any ground to interfere with the order of the CIT(A). The CIT(A) has rightly held that the order of assessment by DMC cannot be said to reflect the real investment made by assesses in construction of his property. The purpose of making of assessment of the value of the property by the DMC is to levy property tax. There is also force in the contention of the assessed that such valuation by the DMC was not challenged by him on the ground that his liability for property tax did not justify challenging the order of assessment by DMC considering the legal expenses involved in doing so. There was Therefore no basis for AO to have made the impugned addition. The CIT(A) was fully justified in deleting the same. The second ground of appeal in both the appeals are, Therefore, dismissed.

The CIT(A) and the Tribunal have in our view rightly held that the only basis for making of the addition namely, the assessment of the value of the property by MCD for levy of property tax was insufficient for determining the extent of investment made by the assessed in the construction of the property. There is no error of law or perversity in the said finding to warrant interference. Mr. Jolly''s submission that the CIT(A) and Tribunal have ignored a certain valuation report which was according to him seized in the course of the search proceedings, has not impressed us. It is true that the CIT(A) has referred to a valuation report indicating the value of the property to be Rs. 11,32,000 but in the absence of any material to show as to when was that valuation report prepared and for what purpose, it is difficult to see how the said valuation would hold any key to the question of the investment made by the assessed in the construction. In the totality of the circumstances, Therefore, no question of law arises for our consideration much less a substantial question of law. Dismissed.